No, FICO is not a dog’s name, but it is a name that has a lot of bite to it.
FICO is your credit score. It is short for the Fair Isaac Corporation, and it is used to determine what you can afford, and how reliable you are in paying your debts. If you are looking to buy a car or house or make a major purchase on credit, your FICO credit score will determine if you can make the deal, and what the terms will be.
FICO recently announced a series of changes that will be taking place in its formula, which should boost the credit score of millions of Americans. Is this good news for consumers, who may have more access to credit but can’t really afford it? Is this good news for banks in that more people will be eligible for credit at a lower interest rate? Time will tell.
The changes are, for the most part, two-fold. Your credit score will no longer include paid collection accounts and unpaid medical bills will carry less weight than outstanding credit cards.
The changes aren’t likely to be so dramatic that it will make a difference between getting a loan request approved or denied, but this is likely to affect the terms of the loan. Home and car loans may become more affordable for people who were facing large interest rates. This could spark a rise in home sales and consumers may be attracted to lower interest rates.